China Trade: Myths vs. Reality

Do you honestly believe lowering the corp tax rate to say zero would have even slowed down the off shoring?

...we are so poor the ChiComs are loaning US money.

Pet peeve of mine, sorry. Are you poor because you purchased a Honda over a Ford, or because you spent money you don't have?

BMW, Mercedes Benz, and Volkswagen to build auto plants here now?

Doesn't that prove that moving off shore isn't necessary? They make a profit right?

But more to your point, the problem with your example is that the products produced(cars) by those German firms are consumed in the USA. If the Kruats tied to ship them back to Germany there would be riots in Berlin.

Nobody moved to China to save a company, all were making a profit. Greed is good but when combined with stupidity and zero loyalty to the USA is traitorous. Yes I said it, traitorous. History repeats itself.

Do you honestly believe lowering the corp tax rate to say zero would have even slowed down the off shoring?

Of course it would. And why stop there? One could slash payroll taxes and everything else while we're at it. The logic is pretty simple: The less disincentives a firm has to hire workers in the US, the more likely it is that they'll hire US workers.

most of the products that we seem to be able to purchase (affordably) are made in China, with American names and we are so poor the ChiComs are loaning US money.

Just curious. Would it then suit you if we were loaning China US tax dollars to buy American-made hammers?

“Pet peeve of mine, sorry. Are you poor because you purchased a Honda over a Ford, or because you spent money you don’t have?”

I did none of those things. I drive a 15 year old Dodge Ram and live within my means.

And yet your government is running a $1.6T yearly budget deficit and must borrow a large portion of it from China. Now do you get it?

Of course it would.

Even if corps paid no taxes, the off shoring would continue unabated. The lure of virtual compliant slave labor is too strong.

Yes I get it. I also get that much of the manufacturing that used to take place in this nation is now in China. I don’t necessarily blame the Chinese for that, I blame the Unions and the federal and state governments for killing the golden goose.

But do NOT make the mistake of thinking that the ChiComs are our friends. They are not.

And yet your government is running a $1.6T yearly budget deficit and must borrow a large portion of it from China.

But not yours? LOL, now we know why your loyalties aren't with America LOL.

If I had a hammer
I’d hammer in the morning
I’d hammer in the evening
All over this land
I’d hammer out danger
I’d hammer out a warning
I’d hammer out love between my freeper brothers and sisters
All over this land

I like Walter Williams. Most of the time I agree with him. Here... well..., lets just say I don't.

This article of his warranted a response. I wanted to keep it shorter, but there is so much fertile ground here, I didn't want to gloss over anything. Here goes...

Republicans and Democrats, liberals as well as conservatives, have bought into anti-Chinese trade demagoguery.

Demagoguery? Walter, when I and my fellow U. S. Citizens go out to make purchases of durable goods, we have a very hard time finding anything made in the United States. I don't know what stores you are frequenting, but if you know of one or more where the merchandise is primarily made in the United States of America, why didn't you merely point them out here?

Former House Speaker Nancy Pelosi suggested that tariffs against China are a "key part of our 'Make It in America' agenda."

China does not charge large tariffs on our imports to that nation. Instead it manipulates it's currency which causes our goods to be around 35 to 40% more expansive than they would normally be. If we charge any tariffs at all on Chinese products being imported into the United States, it's a very small percentage. Is that equitable? You should know this Mr. Williams.

Mr. Williams, are you aware that in the founding of our nation, it was devised that our federal government would be funded by..., wait for it..., wait for it..., tariffs? To be clear, what are you inferring here? Is it that our Founding Fathers were the Nancy Pelosi sort, or are you making the case that she is wrong to have accidently alligned herself with these fine men in error and that is tragic?

Did someone mention Demagoguery?

During his 2010 campaign, Senate Majority Leader Harry Reid, D-Nev., called his tea party-backed Republican challenger, Sharron Angle, "a foreign worker's best friend."

Out of context, I'm not sure what this relates to. What I do know, is that Harry Reed and I have about as much in common as daylight at high noon and a moonless night. Democrat as well as Republican policy has been supportive of massive lopsided trade with China. Perhaps Sharon Angle did something that indicated she approved of this. Even so, Harry Reid has approved of it for many years, so he's not one to make this type of charge.

Lets ask a few of questions that most of us can readily answer.

Even before the massive sub-prime mortgage collapse, which nation's economy was thriving? The United States or China?

Since the United Stated decided to persue uncontrolled massive (the pretense of) Free Trade with China around 1993, which nation's infrastructure has improved the most?

Is massive lopsided trade with China, that sees the United States experience almost $1 trillion dollars in trade deficits per year, evidence of Free Trade?

Is trade that transfers massive amounts of proprietary technology (some of it integral to military applications) from the United States to China, healthy?\

We could ask more questions here? Lets move on...

In a recent news conference, President Barack Obama gave his support to the anti-China campaign, declaring that China "has been very aggressive in gaming the trading system to its advantage," adding that "we can and should take action against countries that are keeping their currencies undervalued ... (and) that, above all, means China."

Nice rhetoric, but did our illustrious president take any action at all to remedy this? I probably agree with Obama about 0.1% of the time. Here I do. And Walter, if a nation is gaming it's currency by 35 to 40% so that our trade is embalanced with it, why shouldn't we take note and remedy the situation? Do you or don't you believe in Free Trade? A 35 to 40% currency manipulation, is not indicative of a Free Trade practice, and you above most people should know this.

Republican 2012 presidential candidates have jumped on the anti-China bandwagon. Mitt Romney wrote: "If I am fortunate enough to be elected president, I will work to fundamentally alter our economic relationship with China. ... I will begin on Day One by designating China as the currency manipulator it is." Former Sen. Rick Santorum, R-Pa., was even more challenging, saying, "I want to go to war with China."

First of all, I don't think it reveals much wisdom to quote Santorum like this without context. I am realatively certain Santorum did not mean he wanted a hot war with China.

Knowing what we do, why shouldn't Romney and Santorum state they want to take corrective measures concerning our trade with China?

Let's look at the magnitude of our trade with China. An excellent place to start is a recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled "The U.S. Content of 'Made in China.'" One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department's Bureau of Economic Analysis.

Walter, Walter, Walter...

Hale and Hobijn find that the vast majority of goods and services sold in the United States are produced here. In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5 percent came from China. A total of 88.5 percent of U.S. consumer spending is on items made in the United States, the bulk of which are domestically produced services -- such as medical care, housing, transportation, etc. -- which make up about two-thirds of spending. Chinese goods account for 2.7 percent of U.S. personal consumption expenditures, about one-quarter of the 11.5 percent foreign share. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6 percent of U.S. consumer purchases in 2010 were items with the "Made in China" label.

Walter, do you have any idea what the percentage of cars sold in the U. S. yearly, are still manufactured inside the United States. Do you understand that the cars considered manufactured inside the United States have minor and major components manufactured outside of the United States? Transportation? Really?

When I read Walter Williams, I do so to gain some honest unadultrated insight. As sorry as I am to say it, this article of his didn't even come close to that standard. It's actually rather shameful.

We're talking about the subject of China and wholesome trade with the United States. The question that hangs in the balance, is whether what we are doing (with regards to trade with China) is good or bad? What would be reasoned to mention when it comes to that trade? Wouldn't you think the spectrum of items being traded and the actual trade practices in place, to be solely pertinant to the crux of the issue?

Instead of just addressing the figures associated with that two way trade between us, Willaims introduces U. S. medical care, housing, and trasportation costs, three massive industries. The inclusion of these industries two of which have nothing whatsoever to do with trade, reveals the depths to which some people will stoop to, in an attempt to minimize what truly is a significant problem. It's just shameful to employ this tactic. It's beneath Walter Williams to do this. I don't think it's a good example of what his normal thought processes are on other issues. It really saddens me to see him do it here.

Walter, please, get out of the house and go to any local tangible good retailer. Look at what they are selling. If you see any medical care, housing, and transportation there, let me know. No, bycicles, skateboards, and roller skates don't count.

Since you don't have any idea what is sold in your local tangible good retail outlets, it's obvious that you couldn't understand that the goods manufactured in China are vastly inferior to what we used to make in the United States. VCRs lock up after a few years. Camera circuitry seems to go bad in a few years. Other electronic items have short circuits. Many of the items made in China, need to be replaced after only a few years. They are not durable.

I have some old phones from the 1960s. I can hook one of them up, and they work flawlessly. I can't get a China version to last more than three years. At that point, I'm out shopping for a new set of phones again. What quality control is there? Is this siphoning of U. S. consumer wealth evidence of something that is healthy for the United States?

Much of what China sells us has considerable "local content." Hale and Hobijn give the example of sneakers that might sell for $70. They point out that most of that price goes for transportation in the U.S., rent for the store where they are sold, profits for shareholders of the U.S. retailer, and marketing costs, which include the salaries, wages and benefits paid to the U.S. workers and managers responsible for getting sneakers to consumers. On average, 55 cents of every dollar spent on goods made in China goes for marketing services produced in the U.S.

Honest to God Walter...

Are you trying to tell me and the rest of your readers that rent for stores, marketing costs, salaries, wages (isn't that salaries), benefits (isn't that salaries), paid to the U. S. workers and managers wouldn't be paid if we were talking about U. S. manfactured goods? The mention of these factors here is a smoke and mirrors tactic. They are all a push, when it comes to this conversation. Once again, it is shameful that you would stoop to this.

Going hand in hand with today's trade demagoguery is talk about decline in U.S. manufacturing. For the year 2008, the Federal Reserve estimated that the value of U.S. manufacturing output was about $3.7 trillion. If the U.S. manufacturing sector were a separate economy -- with its own GDP -- it would be tied with Germany as the world's fourth-richest economy.

Blah, blah, blah, blah! When our economy was barreling along a few years back, we were experiencing nearly $1 trillion dollars in trade deficits with China. Now you're making the case that all that trade didn't cost us U. S. jobs. Seriously fella, put that thinking cap on.

Today's manufacturing worker is so productive that the value of his average output is $234,220, three times higher than it was in 1980 and twice as high as it was in 1990. That means more can be produced with fewer workers, resulting in a precipitous fall in manufacturing jobs, from 19.5 million jobs in 1979 to a little more than 10 million today.

Oui vey. U. S. worker productivity is good. Is that why we have 9.5 million (your figures) fewer manufacturing jobs in the United States today? Really? That's your logical conclusion? Nearly $1 trillion in goods manufactured in China had nothing to do with it? Bud, for heaven's sake, just be honest with us. You're a thinking person. THINK!

Here's another question for you. If U. S. workers are so productive, why is it that they aren't good enough to make the things that are now made in China? You just made the case for it. I didn't.

The bottom line is that we Americans are allowing ourselves to be suckered into believing that China is the source of our unemployment problems when the true culprit is Congress and the White House.

Walter, trade with China has cost this nation millions of decent paying jobs, and that's not non low wage service sector jobs. Who said this problem wasn't connected to Congress and the White House?

This is without a doubt, the worst Walter Williams commentary I have ever read.

Here's the thing:

I live within my means, therefore your government cannot.
We live within our means, therefore our government cannot.

I - - > your
We - - > our

What is it about America Firsters who act as though American English is their second language?

Ha ha, Merry Christmas.